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US Factory Sector Expands at Fastest pace in 7 Years

The factory sector expanded in January at the fastest pace in seven years, as manufacturers reported a sharp jump in new orders.

The Institute for Supply Management, a private trade group, says its index of manufacturing activity rose last month to 60.8. The sector has expanded for 18 straight months of expansion, and January’s reading was the highest since May 2004. Any reading above 50 indicates expansion.

Excerpts from the February ISM report:”Of the 18 manufacturing industries, 14 are reporting growth in January, in the following order: Petroleum & Coal Products; Primary Metals; Apparel, Leather & Allied Products; Wood Products; Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; Machinery; Paper Products; Miscellaneous Manufacturing; Chemical Products; Furniture & Related Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. The four industries reporting contraction in January are: Textile Mills; Printing & Related Support Activities; Plastics & Rubber Products; and Nonmetallic Mineral Products.

WHAT RESPONDENTS ARE SAYING …
  • “Continued weakness in the dollar is having a negative effect on the components we purchase overseas and increasing our material costs.” (Transportation Equipment)
  • “Lead times are increasing significantly, and commodity pricing is starting to increase.” (Chemical Products)
  • “January/February sales will be decent, and we see a strong March. We’re cautiously optimistic but reluctant to hire.” (Fabricated Metal Products)
  • “Business is still slow with no pick-up in sight.” (Furniture & Related Products)
  • “We continue to see unexpected strength in many non-U.S. markets.” (Fabricated Metal Products)”

See the full ISM report here…http://www.ism.ws/ISMReport/MfgROB.cfm

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1 Comment

  1. Bound to happen, wasn’t it? The smarter ones took advantaged of write-offs and bought capacity in order to be prepared.

    It will take 3 or 4 quarters to see if this pans out on their gamble.